New research from an entrepreneurial think tank shows that over a quarter of business owners polled have increased their working hours as a direct consequence of the current economic downturn – working an average of eight extra hours per week.
The data from Tenon Forum also shows that business owners have already started to lay staff off in order to survive the downturn. Over a quarter (26 per cent) of entrepreneurs surveyed have already let go of staff since the start of the credit crunch, and a similar proportion (24 per cent) are planning to cut wages by an average of nine per cent over the next 12 months.
Despite these planned cuts, employers are keen to maintain staff morale through the difficult times ahead and many plan to compensate employees in other ways. Bonuses (14 per cent) and flexible working (10 per cent) are the most common incentives due to be introduced by entrepreneurs in 2009, while six per cent intend to offer employees additional holiday to keep them on side.
However, 54 per cent of entrepreneurs do not plan to offer any form of motivational incentive to their employees in place of a pay rise – a clear indication of the need for small businesses to tighten their belts across the board.
Carl Jackson, Head of Tenon Recovery, commented:
“It’s no surprise that entrepreneurs are upping their hours to stay afloat as we continue to see record number of failing businesses and no sign of the recession easing. However, it is encouraging to see small businesses being realistic and taking practical steps to see them through the downturn.”
“While entrepreneurs may be faced with some difficult decisions over the coming months, including making redundancies and pay cuts where necessary to remain profitable, it’s important to remember the value a trusted workforce can bring. In these uncertain times, bosses and their staff need to work together to ensure their businesses are in the best possible position to have a successful year in 2009.”
On a more optimistic note, more than a quarter (28 per cent) of small businesses actually plan to increase wage spend over the coming year, with the average rise at just over five per cent, suggesting that some entrepreneurs are taking advantage of the downturn to recruit strong candidates.
Entrepreneur and think tank member Richard Watts, Partner Europe at McKinney Rogers, said:
“As a business, we’re seeing more and more of our clients in need of creative and practical ways to adapt and ‘recession proof’ their businesses. Our customers ask us to help them be prepared in the face of the economic recession and win share against the competition. We help them to re-energize, re-think and re-focus the business, using realistic targets.”
“We also practice this model to adapt and ‘recession proof’ our business and we are experiencing a steady and sustained growth during this difficult period. The recent downturn has given many businesses the impetus they needed to look at where they can tighten things up across the board so their businesses run as smoothly and efficiently as possible.”